RoadMap to Achieve the (Renewable) H2 Economy

June 3, 2019

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Key Factors Required for a Renewable Hydrogen Economy

Source: Hydrogen Council

Achieving Scale and a Roadmap to Value Chain Profitability

A Level Paying Field relative to other forms of Alternative Energy

Global Collaboration between Public and Private Sectors

A Predictable and Sustained Commitment from Governments

Hydrogen Council Vision: The Hydrogen Economy in 20502050 Hydrogen Vision

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Ministry of Economy, Trade and Industry

METI Headquarters 1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan

Minister Responsible

•Hiroshige Sekō, Minister of Economy, Trade and Industry

Japan’s Responsibility for Energy Transition

Energy trilemma:

Energy Security

Environment (Sustainability)

Economic Affordability (Cost)

3 “E” + Safety

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Iwatani Corporation

ENERGY47%

MATERIALS20%

AGRI-BIO FOODS & OTHER

6%

INDUSTRIAL GASES & MACHINERY

27%

Established May 5, 1930

Consolidated Net Sales: ¥ 670.7B / $6.7B (FY 2017)

Employees: 9,453 (3/2018)

CEO: Akiji Makino

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Iwatani’s Commitment to Hydrogen in Japan

27 Fueling StationsManufacturing Plants Distribution Equipment

Leading Market Position

Vertically Integrated Supply Chain

Significant Focus on Safety

Extensive Investment in R&D

Iwatani is Investing Significant Capital in the US Hydrogen Infrastructure

Source : California Energy Commission

Entering the Light Duty Hydrogen Fueling Station Market in California

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Future Opportunities

Renewable Energy

Production

Renewable Hydrogen Production

Medium & Heavy DutyZEV Fueling

Hydrogen’s Role and Contribution to Japan’s 3E + Safety Policy

Energy Security Mitigates dependence on specific countries

Environment (Sustainability) De-carbonized energy source

Economic Affordability (Cost) High priority: Access to low-cost feedstock

Oil(40%)

Coal(27%)

Gas(27%)

HydroNuclear

Renewables

Japan’s Sources of Energy: 2016

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Japan’s “Basic Hydrogen Strategy”

Prime Minister Abe’s H2 Initiatives

Establish World’s 1st National H2 Strategy

2050 Vision: Position H2 as a new energy option

Affordable H2

$3/kg by 2020

$2/kg by 2050

Essential Enablers

Achieve Scale across the entire Supply Chain

Leverage untapped resources

Encourage / Incentivize Mass Adoption

Mobility

Power Generation

Tokyo Statement Agenda Outcomes

Harmonization of Regulation, Codes and Standards

International Joint R&D emphasizing Safety

Study and evaluate Hydrogen’sPotential

Communication, Education and Outreach

Examples of Some of the Global De-carbonized Hydrogen Projects

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Today’s High-level Hydrogen Supply Chain for Fueling Stations

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H2 Production Processes

Reforming (SMR) Gasification Electrolysis

Feedstock Options

Natural Gas Chemical Biomass Coal (w/ sequestration) Water Nuclear Residuals Others

H2 Conversion/Handling

Liquefaction Compression

H2 Distribution

Liquid Trailer Tube Trailer (Gas)

H2 Dispensing

Vaporized Liquid Compressed Gas

Anticipated Future State Hydrogen Supply Chain: Gaps / Challenges

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Gap: Increased Reliance on Renewable Power Generation

Challenge: Price of Power / Timing of Investments

• Gap: Significant % H2 Feedstock Required to be Derived from Renewable Sources / Low Carbon Intensity Pathways

• Challenge: Significant Cost Reduction Required; Definitions / Incentive Programs & Capital

Gap: Cost Parity of H2 at Dispenser with Gasoline

Challenge: Upstream H2 Capital Investment will likely require ROI / T&C’s to compensate for Downstream Risks

Gap: Significant Increase in Liquid H2 Production & Transport Equipment Required

Challenge: Timing of Capital Investment with Demand Realization

Iwatani’s Vision: To Create a Global Scale CO2-Free H2 Supply Chain

Renewable Energy & H2 Production

Import & Distribute H2Throughout Japan

Ocean Transport

Solar, Wind, Hydro, Bio-Waste Recovery & Others

Electrolyzer & Other Renewable Hydrogen

Sources

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Hydrogen FC Vehicles Turbines for Power Generation Back-up Power Generation Fuel Cell Powered Equipment

CA H2 Supply Chain Challenge: Scale Alone Might not be Enough

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Expanding Liquid H2 Supply

World Class Plant: 30 TPD / $125 MM+

To achieve Long Term CA LD Goals could require 20+ New LH2 Plants, massive increases in storage capacity and Significant investment in new Distribution Equipment

Building Standalone Merchant LH2 Plants are Speculative Investments and present Supply Agreements reflect this reality

Unlike gasoline, there are no LH2 Racks today and H2 Costs are relatively less transparent

Renewable Power Generation & Grid kWh Cost

$/kWh Grid Price puts Electrolizers at a disadvantage in many markets

Scale projects have likelihood of proceeding where new Utility Islands can be created utilizing Hydro, Solar and Wind Power Generation (i.e.. Canada)

Shift to Renewable H2 Sources

Visibility into timing of capacity additions, potential for grid integration, reliability enhancements, proximity and Gov’t policy/commitment are key factors

Regulatory Agency Commitment to Definitions of Renewable Pathways are essential to De-Risk Project Investments

Achieving Cost Parity at the Pump for Drivers

$3.50/gasoline gallon / 27 MPG = $0.13/Mile* Today $14/Kg H2 / 66 MKg = $0.21/Mile* Cost Parity would require roughly $8/Kg H2*

How long will Automobile OEM’s subsidize fuel purchases?

Positive NPV at LT Target H2 Cost at Dispenser requires subsidies

Vertically Integrated Competitors will likely have a significant advantage

*Source: CEC & CARB Staff Report on AB8

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Innovation is Driving Demand for H2…But it is a Long Term Play

Support from Government & Public Sectors is Essential

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Achieving Scale leads to a Sustainable Industry

Harmonization of Codes & Standards enables economies of scale via equipment procurement savings, station design and inter-operability across national boundaries

Promote Development of Light AND Heavy-Duty ZEV Infrastructure

Support Transportation Initiatives: Maritime, Bridges & Tunnel Crossings

Encourage All Forms of Renewable Hydrogen Production

Create a Level Playing Field Across All Alternative Fuel Modes

Support Programs that Encourage Collaboration between Public and Private Sectors (e.g. Japan & California Model)

Predictable and Sustained Commitment Allows for Long-Term Investment, Planning and De-Risks Projects

Many Challenges…but Japan and California are Two Bright Spots

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Significant Government Agency Support & Constructive Engagement and Financial Commitment

CEC, CARB, BAAQMD, SCAQMD, GO-Biz, DOT, DOE, NREL, SANDIA, Local Municipalities & Others

METI, New Energy and Industrial Technology Development Organization (NEDO) and Japan External Trade Organization (JETRO)

High Private Industry Commitment and Investment

Automobile OEM’s, Industrial Gas & Energy Company’s, Capital Equipment Suppliers and Entrepreneurs

Trade Organizations creating platforms for constructive collaboration and overcoming the chicken and egg dilemma

Hydrogen Council, JHyM, California Fuel Cell Partnership, CHBC & Others

University Support and Talent Pipeline

Hydrogen on a World Platform: G20 Ministerial Meeting

Energy Transitions & Global Environment for Sustainable Growth

June 15 & 16, 2019

Karuizawa, Japan

Anticipated Outcome:

Communique

Action Plan

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Thank you

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